Eric W. Orts

Business Persons

A Legal Theory of the Firm

Eric W. Orts

Description

Business firms are ubiquitous in modern society, but an appreciation of how they are formed and for what purposes requires an understanding of their legal foundations. Intended for general readers, as well as students and policy markets, Business Persons provides a scholarly and yet accessible introduction to the legal framework of modern business enterprises.

It explains the legal ideas that allow for the recognition of firms as organizational "persons" having social rights and responsibilities. Other foundational ideas include an overview of how the laws of agency, contracts, and property fit together to compose the organized "persons" known as business firms. The institutional legal theory of the firm developed embraces both a "bottom-up" perspective
of business participants and a "top-down" rule-setting perspective of government.

Other chapters in the book discuss the features of limited liability and the boundaries of firms. A typology of different kinds of firms is presented ranging from entrepreneurial one-person start-ups to complex corporations, as well as new forms of hybrid social enterprises. Practical applications include contribution to the debates surrounding corporate executive compensation and political free-speech rights of corporations.

Business Persons

A Legal Theory of the Firm

Eric W. Orts

Table of Contents

Introduction - The Recognition and Boundaries of the Firm1. Foundations of the Firm I: Business Entities and Legal Persons2. Foundations of the Firm II: Agency, Contracts, and Property3. The Public/Private Distinction: Two Faces of the Business Enterprise4. Enterprise Liability, Business Participant Liability, and Limited Liability5. The Nomenclature of Enterprise: A Taxonomy of Modern Business Firms6. Managing and Regulating the Shifting Boundaries of the Firm7. Two ApplicationsConclusion

Business Persons

A Legal Theory of the Firm

Eric W. Orts

Author Information

Eric W. Orts is the Guardsmark Professor of Legal Studies and Business Ethics at the Wharton School of the University of Pennsylvania with a secondary appointment in Management. He is the faculty director of the Initiative for Global Environmental Leadership and a co-faculty director of the FINRA Institute at Wharton. He has been a visiting professor at the University of Leuven, the University of Michigan Law School, NYU School of Law, Tsinghua University School of Economics and Management, the University of Sydney Law School, and UCLA School of Law. His research focuses on business theory, corporate law, ethics, and sustainability.

Business Persons

A Legal Theory of the Firm

Eric W. Orts

Reviews and Awards

"This book is a path-breaking analysis of the business firm from a legal perspective. As shown by the debate surrounding the Supreme Court's Citizens United decision, the question of corporate legal personality has resurfaced as one of the key legal and political issues of our time. Prof. Orts' book is indispensable reading for anyone interested in exploring the extent to which 'corporations are people too.'"--Reuven S. Avi-Yonah, Irwin I. Cohn Professor of Law, University of Michigan Law School

"In this comprehensive study, Eric Orts takes on the economists and shows why law is essential to our understanding of the business firm. Anyone who cares about the future of business should be grateful for this addition to the literature."--Lynn Sharp Paine, John G. McLean Professor of Business Administration,
Harvard Business School

"Orts has rethought and reformulated corporate law theory, echoing the work of Adolf Berle, Gardiner Means, and H.L.A. Hart. While recent scholarship on the nature of the firm have stressed economic and finance theory, Orts frames the analysis around legal theory. Employing an ethics-focused, multi-perspective approach, Orts draws parallels to the history and philosophy of law. It re-elevates the roles of agency, contract, and property law and theory in addressing questions about the firm. The book includes crucial insights into the modern taxonomy of firms and their shifting boundaries, as well as practical contributions to the policy debate about executive compensation challenges and corporate political speech. Orts is a leading voice advocating a more nuanced view of
the firm, delivering a thoroughly-researched and foundational book that is a must-read for anyone thinking about the theory of the modern firm."--Frank Partnoy, Professor of Law and Finance, University of San Diego

Business Persons

A Legal Theory of the Firm

Eric W. Orts

From Our Blog

Eric Orts on business theory
Business is one of the most powerful and influential institutions in our world today, but there has been relatively little theoretical work from scholars...We sat down with Eric Orts, author of Business Persons, to discuss thinking critically about business institutions in a theoretical manner.

By Eric W. Orts
'Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.' Keynes' warning applies to debates about skyrocketing levels of executive compensation in the United States and elsewhere.

By Eric W. Orts
On 1 August 2013, Delaware became the nineteenth state in the United States to adopt a version of a benefit corporation statute, which is designed to expand the range of legitimate purposes undertaken by business firms to include the interests of employees, environmental sustainability, and other nontraditional social goals beyond the traditional objective of profit-making for owners and investors.